Analysis & Opinion

PARIS (Reuters) - Sanofi-Aventis (SASY.PA) has extended its snubbed $18.5 billion cash bid for U.S. biotech group Genzyme GENZ.O by six weeks, buying the French drugmaker time to persuade its reluctant target to talk.

Only 0.9 percent of shares were tendered by a Friday deadline. Genzyme has rejected the $69-a-share bid as too low; Sanofi has said it won't raise the offer unless Genzyme's board is willing to talk.

Investors and analysts say an offer price of $75 to $80 per share is more likely to attract shareholders, and the stock has traded above the offer Sanofi took hostile in October. On Monday, Genzyme shares rose 0.7 percent to $70.32.

A spokesman for Sanofi said the company still wanted to enter talks with Genzyme.

Sanofi could look at including a scheme linking Genzyme's value to future performance of its key experimental multiple sclerosis drug, Campath, people familiar with the situation said last week.

Raymond James analyst Eric Le Berrigaud said Sanofi's decision to extend its offer "gives time to pursue discussions behind the scenes."

He added, "They will try to determine at what price Genzyme will decide to partially open the door."

The idea of contingent value rights (CVRs) is favored by the Genzyme camp. Through CVRs, Sanofi could end up paying more if Campath proves to be the success Genzyme expects.

"I find it surprising that they haven't raised their offer. If they are extending their offer, it's probably to negotiate a CVR," CM-CIC analyst Arsene Guekam said. "I don't expect them to raise the offer very significantly, maybe one or two euros."

Sanofi's efforts to buy Genzyme could continue until May, when Genzyme holds its annual shareholder meeting, giving Sanofi a chance to try to overturn Genzyme's board.

The company said on Monday its offer would now run until January 21, "unless it is further extended."

Long takeover battles are not uncommon. U.S. industrial gases company Air Products (APD.N) has been trying to buy Airgas (ARG.N) since February, while in the drug sector, it took about eight months before Roche (ROG.VX) could buy the part of Genentech it did not already own.

Genzyme Chief Executive Henri Termeer raised the possibility of negotiating a CVR last month as a way to break the stalemate between him and Sanofi CEO Chris Viehbacher. Sanofi's finance head, Jerome Contamine, called it "an interesting idea in principle" to resolve value disputes.

Termeer has said he is prepared to sell the Cambridge, Massachusetts-based biotech he built up over 25 years, but not at $69 a share. Genzyme, the world's leading maker of drugs for rare genetic diseases, made sales in 2009 of $4.5 billion.

Genzyme became a takeover target when viral contamination at its plant in Boston led to a manufacturing crisis that caused severe shortages of two of its biggest selling drugs.

Genzyme shares fell from a peak of almost $84 before the manufacturing crisis in 2008 to $45.39 in May, their lowest level since July, 2004. Since Sanofi's interest emerged, the stock has been trading above $69 and as high as $73.23.

Buying Genzyme would give Sanofi a new and high-margin growth area as mounting generic competition will take out roughly a third of its 2008 sales base by 2013.

Sanofi head Chris Viehbacher has said he would be open to raising the offer if Genzyme's board agreed to provide evidence of a higher valuation.